Tether plans new stablecoin pegged to UAE dirham

Investing.comAug 22, 2024 12:58 AM

Tether, the company behind the $114 billion USDT token, plans to launch a new stablecoin pegged to the United Arab Emirates (UAE) dirham.

The yet-to-be-named stablecoin will be rolled out in collaboration with UAE-based tech giants Phoenix Group PLC and Green Acorn Investments Ltd. While the companies did not provide a specific launch date, Tether CEO Paolo Ardoino said obtaining licensing from the Central Bank of the UAE will be the next step, and could take a few months.

The Dirham-pegged stablecoin will be fully backed by liquid UAE-based reserves, following Tether’s reserve standards to “ensure stability and trust in its value,” Ardoino said in a press release.

The new token is expected to streamline international trade and remittances, reduce transaction fees, and provide a hedge against currency fluctuations.

The UAE’s central bank has already paved the way to regulate cryptocurrencies pegged to real assets. In June, it approved a plan to oversee and license stablecoin arrangements, specifically those backed by the UAE dirham.

While the details are still being ironed out, the step is part of the UAE's push to become a leader in crypto space under its Financial Infrastructure Transformation Programme.

Currently, stablecoins not backed by the dirham are regulated by Dubai's Virtual Assets Regulatory Authority (VARA). While there are still some questions over how existing payment service providers will be affected, the proposed framework creates a clear path for regulated stablecoins in the UAE.

Tether’s expansion into the UAE market comes as the issuer continues to expand its services beyond its flagship USDT, which is the largest stablecoin by market value and a key component of the digital asset ecosystem.

The company has recently launched USDT on the Aptos blockchain to reduce gas fees to “only a fraction of a penny,” it said in a statement earlier this week.

Tether's USDT is available on multiple blockchains, with Tron leading the way at $60.73 billion in net circulation, followed by Ethereum at $52.59 billion.

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